The relationship between business ownership and unemployment in Spain: a matter of quantity or quality?

Abstract

This paper examines the interrelations between self-employment and unemployment rates for Spain in the\nperiod 1972-2004, comparing them with the general pattern observed for OECD countries. We apply the model\nas proposed by Audretsch, Carree, van Stel and Thurik (2005) to Spain. The divergence between predicted and\nactual unemployment levels in Spain are explained by country-specifi c shocks in the period under study, which\nare outside the scope of the model. This indicates that the general mechanism of employment generation by\nthe self-employed may also be applicable to Spain, at least in the long run. The Spanish industrial structure is\ncharacterized by a relatively high and fl uctuating unemployment level and a relatively high and stable business\nownership rate, suggesting that the quantity of business ownership in Spain does not have a particularly large\ncontribution to bringing down unemployment. In recent years we see that the unemployment rate decreases\nand stabilizes. We argue that, in addition to several labor market reforms, an increase in the quality of business\nownership in Spain may also have contributed to the recent decrease in the unemployment rate.\nKeywords: entrepreneurship, self-employment, unemployment, economic growth, Spain

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